Obama apparently had hoped to proclaim himself the middle class champion who went after the big bad banks to get a relatively paltry $20,000 slashed from each of the loans of a relatively small number of underwater homeowners He was planning to spin a sweetheart deal with foreclosure fraudsters at five too-big-to-exist banks into a victory for the middle class. And that would have been a major fib, because the money would have come not from the banksters themselves, but from pension funds containing bundled mortgage securities. It would have given to the middle class by taking from the middle class. The deal would not have sent one banker to jail, nor taken one nickel from the bloated bonuses of the likes of Jamie Dimon and Brian Moynihan.
The Obama Administration had summoned the state attorneys general to Chicago on Monday to try to persuade them to leave the criminals alone and to forget about extracting justice for their constitutents. From today's New York Times:
The housing secretary, Shaun Donovan, met on Monday in Chicago with Democratic attorneys general to iron out the remaining details and to persuade holdouts to agree with any eventual deal. He later held a conference call with Republican attorneys general. But as he renewed his efforts, Democrats in Congress, advocacy groups like MoveOn.org and several crucial attorneys general said the deal might be too lenient on the banks.....
Tom Miller, the attorney general of Iowa, said Monday that an agreement with the nation’s five largest mortgage servicers — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial — would not be reached “anytime this week.”
In a letter to administration officials, Senator Sherrod Brown of Ohio said the settlement as reported — its details were not fully known — was too small and would allow banks to pass on the cost of the settlement to “middle-class Americans” whose pension funds hold soured mortgage securities.
In addition to disagreements over the total amount, negotiations have been held up over the question of how much latitude authorities would have in pursuing investigations into mortgage abuses before the housing bubble burst in 2007. The banks are pushing for a broad release from future claims, but several attorneys general, including prominent figures like Eric Schneiderman of New York and Martha Coakley of Massachusetts, have demanded a tougher line on the banks.A three-pronged pushback against the Administration from activists, legislators and the attorneys general created a major disruption of negotiations. The uproar, although relatively ignored by the mainstream press (The Times story was buried in the rubble of the GOP primary trainwreck) was reminiscent of the massive protest last week against SOPA/PIPA that had craven congress critters scampering for their burrows.
Naked Capitalism's Yves Smith, who has provided some of the best coverage on the background and details of this story, thinks the collapse in negotiations Monday may spell doom for any hope the banks and Obama had for a whitewash going forward -- ever. Obama apparently was counting on the party bosses of the recalcitrant AGs putting pressure on them to fall into line. That didn't happen. The AGs in question didn't bother showing up at Chicage HQ. Writes Smith:
The beauty of protest movements like this is that they act like magnets for the timid and uncommitted. Fighting back against the oligarchy has become chic -- and safe. People just couldn't get onboard the anti-foreclosure settlement train fast enough:We will hopefully get more intelligence (or maybe just better attempts at disinformation) but I read this as an indication the deal agreed between the Federal regulators and the biggest servicers somehow came unglued. Possibilities include: someone exposed a definitional/drafting flaw (the Feds thought it meant one thing and the banks thought it meant another); someone (one of the banks?) retraded the deal; the Administration has assumed it could rely on a certain minimum number of AGs to fall in line and they regarded that minimum number as essential, and the pow wow today exposed that they are below that level.
AFL-CIO President Rich Trumka said today “We call on the administration to reject any deal that insulates banks from full responsibility.” Bob Borosage of the Campaign for America’s Future said “This is a fundamental question of justice and democracy. The law is respected only if it is enforced. No one who robbed a bank would be offered immunity, a modest fine and no admission of guilt – before there was an investigation into who stole the money and how much they took.” The co-chairs of the Congressional Progressive Caucus, Keith Ellison and Raul Grijalva, said “It’s past time we stand up to Wall Street and show the American people that no bank executive is above the law."
In case you missed it, here is a clip of former New York Governor Eliot Spitzer on the foreclosure fraud background and White House involvement on Sunday's Up With Chris Hayes.
Have you got your bullshit detection meter charged up for tonight's State of the Union theater of the macabre? Are we all fired up and ready to scream? Digby says we should take a drink every time Obama says "frankly." I, on the other hand, am now taking bets on how many times he will utter the word "folks." My guess is an even two dozen. I'll have paper and pen handy, keeping score.